CleanStar Mozambique

CleanStar Mozambique

Dondo, MozambiqueBagsvaerd, Denmark
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

CleanStar Mozambique is an integrated food, energy and forest protection business, producing and retailing an ethanol-based cooking solution for urban households in Africa – thus reversing the destructive cycle of charcoal and harnessing urban spending to drive rural development and reforestation.

About Project

Problem: What problem is this project trying to address?

We are addressing 4 interconnected problems: 1) A subsistence farming crisis with rural families practicing "slash-burn-degrade-move" agriculture. 2) Accelerating forest destruction caused largely by charcoal production. 3) Widespread nutrition deficiency and food price instability, with rural families over-reliant on a small mix of staple crops and urban families experiencing major food price fluctuations due to over-reliance on imports. 4) Major cost and health impacts of charcoal use for urban households given high (and increasing) prices and that it is equivalent to smoking 2 packs of cigarettes per person per day, mostly affecting women and small children (according to the WHO).

Solution: What is the proposed solution? Please be specific!

CleanStar Mozambique (CSM) is an integrated food, energy and forest protection business. producing and retailing a modern and affordable ethanol-based cooking solution for urban households in Africa. The company invests across the entire cooking fuel value chain. In rural Mozambique, CSM enables smallholder farmers to transition from subsistence “slash and burn” farming to sustainable surplus production by adopting a low-input agroforestry system that produces cassava, cowpeas, soya, sorghum and groundnut while planting and managing native trees. CSM buys the surpluses from farmers, and efficiently converts them into packaged food products and an ethanol-based liquid cooking fuel in the company’s integrated food and energy facility. CSM’s distribution network - strategically located in Maputo’s low-income neighborhoods – sells cookstoves and fuel at prices that are comparable to charcoal.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

CSM is a highly integrated business that will create economic, social and environmental value at every point along its value chain. Rural smallholders in Sofala province will experience improved nutrition and income increases of at least 300% while planting millions of trees and enhancing biodiversity. Urban households in Maputo will experience cleaner air, a reduced disease burden and lower energy costs while reversing deforestation by transitioning from charcoal to ethanol. By 2014 the venture will involve 2,000 smallholders over 10,000 acres (4,000 hectares), supply at least 20% of Maputo households with a clean and cheaper alternative to charcoal and thus protect 9,000 acres of indigenous forests per year. The company will also employ approximately 1,000 people in Mozambique. From a commercial standpoint, CSM is replicable and scalable across large parts of the developing world, offering the promise of widespread development impacts and significant reductions in global greenhouse gas emissions. By helping establish proof-of-concept in Mozambique, Novozymes intends to catalyze the development of agriculture, food and ethanol industries in developing countries, creating new, sustainable, bio-based markets.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

CleanStar Mozambique is essentially competing with charcoal. Given that we price our solution at the same level but offer greater convenience and functionality, we are confident that we can reach our goal of at least 20% market share by end 2014. Also, we are including the charcoal value-chain players in our new value chain, so we expect minimum resistance from incumbents. It could be argued that we are also competing against other (largely only emerging) cooking solutions like LPG and electricity, but they are weak on various accounts (notably cost and safety) so we do not see them as major threats.
Team

Founding Story

The first idea came in 2008, when I saw that sustainable biofuels could be a driver of rural development in sub-Saharan Africa, leveraging energy markets to drive investment in agriculture (as opposed to food markets rendered largely dysfunctional by agricultural policies in rich world). The first idea was to develop large mono-culture farms producing transport fuel for export to e.g. Europe. However, after extensive consultations with a plethora of organisations (incl. future business partner CleanStar Ventures) and extensive studies, the focus changed to smallholder-based agro-forestry to produce ethanol for cooking fuel. This change maintains the overall idea but has many more positive impacts. The final concept (as has been implemented) came into shape around mid-2010.
About You
About You
First Name

Stefan

Tell us about yourself/your team.

I am Senior Advisor (Sustainable Development) at Novozymes and I'm charged with identifying and developing opportunities for Novozymes to engage in “Base of the Pyramid” (BoP) markets, using clean biotech solutions to help alleviate poverty in financially sustainable ways. Acting as an “intrapreneur” I develop new BoP business concepts, anchor them within relevant departments across Novozymes, and build the external partnerships required for effective incubation. My first major success is with CleanStar Mozambique (www.cleanstarmozambique.com), where I have played a pivotal role in the design and incubation of the business. I have since played an active role in venture management and am now focused on scale-up and replication of the business across sub-Saharan Africa.

What makes you an intrapreneur? What are the skills, capabilities, and personality traits that make you an intrapreneur?

I believe that highly scalable and replicable business solutions will often be the only means by which to meet many of the massive challenges of poverty and environmental degradation (not least by framing them as opportunities). With this fundamental conviction I have set out to achieve impact, which for a given venture requires 1) developing an innovative business concept, 2) navigating and combining internal and external agendas, mandates and resources, 3) developing a detailed business plan and financial model, 4) raising capital, and 5) building the team to execute on the plan. Being successful with these activities has required a range of traits and skills, not least creativity, business and impact analysis, networking, pitching, and business development skills.

About Your Organization
Company Country

, CC, Bagsvaerd

Primary country where this project is creating social impact

, SO, Dondo

Additional countries or regions

Maputo province (Maputo city)

Industry

Agriculture

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Innovation
Select the stage that best applies to your solution

Growth (your pilot is up and running, and starting to expand)

The Solution: Why is this solution innovative for your company and industry?

The business model is innovative in that it is not merely about taking a position in an existing value chain, but is building an entirely new one. Also, it combines a range of existing technologies rather than developing a new one. It is also innovative in its partnerships: combining multinational corporations (like Novozymes, ICM and Bank of America Merrill Lynch), small entrepreneur groups (like CleanStar Ventures and Zoe Enterprises), and rural smallholder farmers.

Impact
What has been the impact of your solution to date?

By end 2012 we had: 1) over 1300 smallholder farmers involved in the venture; 2) over 150 employees in the company, across the value chain; 3) over 4000 ethanol stoves sold.

What is your projected impact over the next 1 to 3 years?

By 2014 CleanStar Mozambique will eliminate demand for charcoal that causes approximately 4,000 ha worth of native forest loss annually by providing 80,000 households with the ethanol-based cooking solution. The greenhouse gas GHG reductions from eliminating charcoal demand will be about 500,000 tons of CO2eq per annum, assuming each stove reduced emissions by around 6 tons CO2eq per annum. Additionally, the venture will ensure the restoration and reforestation of 2.4 million native trees in shelterbelts over the 3,000 ha of smallholder land with mixed native tree species. This will involve over 2,000 farmers whose incomes will be tripled.

What barriers might hinder the success of your project? How do you plan to overcome them?

At this point we see few realistic "show-stoppers". However, one is extreme weather, with the risk of wiping out the smallholder production systems before they are sufficiently resilient. While we can plan to deal with this (supporting farmers, getting insurance as possible, etc.), it could break the business.

Sustainability
What is the benefit or value you're creating for your business?

The CleanStar Mozambique project is in line with Novozymes’ commercial strategies. Novozymes has a strong presence in developed markets as well as in large emerging markets like China, Brazil and India, but many of the company’s technologies also fit the needs of businesses and people in less developed markets that are also experiencing high growth. Novozymes has thus been looking at how to bring its technologies more effectively to these markets, well aware of the need to be innovative with business models and partnerships. CSM is the first attempt.

How are you leveraging internal resources (funds, time, knowledge, etc.) to support this initiative?

Novozymes has allocated significant resources to the development of CleanStar Mozambique, incl. a few million dollars in equity and debt financing, several key staff (at first just me but eventually a team of 8), the enabling technology to make the ethanol, and bringing key partner organisations to the table (incl. ICM). At first resources were secured through the sponsorship of our CEO, but as we progressed, the project has achieved elevated and more formal status in the company (now headed by our Chief of Staff and Executive Vice President of Stakeholder relations).

Expand on your answer, explaining the long-term funding and support plan.

The ambition is to work with our partners (notably CleanStar Ventures) to replicate the business model in other regions of Mozambique and other countries currently relying heavily on charcoal for cooking. This will involve additional financial, human and technical resources, the levels of which are currently being discussed with the aim of announcing a plan in Q1 2013.

Tell us about your partnerships across your company and externally that are key to your project's success.

Novozymes and CleanStar Ventures have jointly founded CleanStar Mozambique and have since joined forces with ICM (US-based world leader in ethanol production plants), Dometic (Sweden-based business that produces the world’s leading ethanol cookstove), Bank of America Merrill Lynch (world leader in carbon finance) and Soros Economic Development Fund (world leading Impact Investor).

What internal support have you gotten for your project? What kind of push-back have you received?

Originally the project was supported directly by our CEO. As the project progressed and matured it was given a wider backing, headed by our Chief of Staff and Executive Vice President of Stakeholder relations. Initial push-back was rife at all levels of the organisation, but the support base grew rapidly as milestones were achieved and the project now enjoys widespread support.